DRAFT TAXATION DETERMINATION TD 2024/D2 AND DRAFT PCG 2024/D1 - SECTION 99B
1. Chartered Accountants Australia and New Zealand, CPA Australia, Institute of Public Accountants, and The Tax Institute (together, the Joint Bodies) write to you as the peak professional accounting and tax practitioner bodies in Australia representing the tax profession.
2. The Joint Bodies make this submission to the Australian Taxation Office (ATO) in relation to
- the draft Taxation Determination (TD 2024/D2) Income tax: factors taken into account in applying the exceptions to section 99B of the Income Tax Assessment Act 1936 contained in paragraphs 99B(2)(a) and 99B(2)(b) (Draft TD) and
- the draft Practical Compliance Guideline (PCG 2024/D1) Section 99B of the Income Tax Assessment Act 1936 (Cth) – ATO compliance approach (Draft PCG).
3. We welcome the ATO publishing guidance to help clarify when section 99B may need to be considered by Australian resident beneficiaries of non-resident trusts, and the expectations regarding record-keeping and substantiation, including the compliance approach for certain low-risk arrangements.
4. Based on the statement contained in paragraph 7 of the Draft PCG, we understand that the ATO intends to only allocate compliance resources to the application of section 99B to trusts that at some time have been a non-resident trust. We note that all 27 examples in the Draft PCG and all six examples in the Draft TD expressly state that a reference to a trust is a reference to a non-resident trust, or only to a resident trust that has accumulated amounts during a period while the trust was a non-resident trust.
5. We welcome this approach by the ATO and support the proposition that section 99B should only be applied in cases involving trusts that are or have been non-resident trusts, as outlined in paragraph 7 of the Draft PCG.
6. We believe the compliance saving measures contained in the Draft PCG will assist many taxpayers in complying with section 99B. We have provided some comments in Appendix A requesting some further clarity in the Draft TD and Draft PCG in relation to a number of the examples.
7. If you would like to discuss any of the above, please contact The Tax Institute’s Senior Counsel – Tax & Legal , Julie Abdalla at julieabdalla@taxinstitute.com.au, CA ANZ Senior Tax Advocate, Karen Liew at Karen.Liew@charteredaccountantsanz.com or CPA Australia’s Tax Lead – Policy and Advocacy, Jenny Wong at jenny.wong@cpaaustralia.com.au